Intrade Betting is Suspicious - Someone betting something will happen to Obama?

[OregonBlue]

Five ThirtyEight.com

Wednesday, September 24, 2008

Intrade Betting is Suspicious

Right now, Obama is trading at 52.3 points. That is, Intrade implies that he has a 52.3 percent chance to become the next President.

Now, I happen to think that is a patently absurd price. But you don't have to take my word for it. Over at BetFair, another large UK-based gambling and futures site, you can also buy an Obama contract. But the price there is 1.62, which implies a 61.7 percent chance that Obama will become the next President.

That is a huge spread, 51.5 points versus 61.7 points. This is the equivalent of the Giants being 3-point favorites at the Bellagio Sportsbook, and 7-point favorites at the Mirage down the block. Those things just don't happen in efficient, sufficiently liquid markets, because they create arbitrage opportunities: you'd lay $10,000 on the Giants at the Bellagio and $10,000 on their opponents at the Mirage. Any time the Giants win by fewer than 3 points or more than 7 points, you lose nothing, since your two bets cancel out. But any time they win by fewer than 7 points but more than 3, you win both bets, and take home $20,000 (less the casino's vigorish) for absolutely no risk. Pretty good deal, right? That's exactly what's happening with these futures contracts.

He then goes on to explain that it's one guy or one group of traders who are betting against Obama and for McCain every 8 hours or so even though it doesn't make sense based on their own state by state trades and then goes on to say they are also buying Hillary contracts. The article continues:

I don't think this is any cause for alarm... if Joe Biden contracts were being bought up as part of this scheme, that might be more concerning, but they aren't. Still, if I were the Secret Service FBI (**), I would probably want to know the identity of this trader. And if I were one of those Beltway pundits who thinks I can be hip by referring to Intrade, I would take a look at the gross inefficiencies in these markets and think better of it.

Somthing is fishy here, read the whole article.

http://www.fivethirtyeight.com/

[rpannier]

1. There are people who bet on anything

Hell...there are people here in Korea that have been thousands of dollars that Myeong-bush (bak) will not be president by the end of the year.

Why? Cuz they can make a bundle if they're right

[OregonBlue]

5. The point of the article is that someone is deliberately manipulating the numbers.

Either because they want to keep Obama's numbers low or because they are betting something will happen to him. It's being done of a daily basis and doesn't jive with state by state trading on INTRADE.

[Old and In the Way]

6. Most likely, the RNC is willing to make bets for McCain to make him look

like he's doing better than he is. Why not? They've got plenty of money to waste. If this helps change the perception that it's a tight race, it will make attempts to steal the election easier to justify. "Look at the trading markets....it was close."

[DS1]

2. Brits can't see a possible reason to vote McCain, is my guess

They misunderestimate the stupidity of the American people

[OregonBlue]

4. It's not just the Brits. It's way off of other markets as well. Someone is deliberately

changing the percentages.

[stillcool]

3. well that is scary..

reminiscent of the 'catastrophic event'